Rent or Buy
Destiny Harris wrote an artice titled “To Rent or Buy: Do What Works Best For You” [1] which is one of numerous, though no less valuable information than any of the other articles on this subject which occasionally get published online or in print. I was actually considering writing an article on this very subject and hers on Medium spurred me to do so.
Some of the pros and cons Ms Harris points to do not always apply.
Some of her pros of renting:
No landscaping or yard upkeep- mostly true but not always.
No maintenance fees — likely built into the cost of rent.
Little commitment — definitely true unless on a lease of some sort.
No property taxes — property taxes are built into the rent (more on this in a minute).*
No HOAs — Not all homes are on Housing Associations
*One of the big problems with renting is that the renter does in fact pay the property tax which is built into rent, but the renter does not get credit for it in tax locations which allow it to be written off during tax filing season.
Some of her Cons of owning:
Hefty down payments to avoid PMI (usually 20%)- maybe. We put down only about 5%
Maintenance and upkeep costs- definitely on the owner.
Homeowners Insurance — My insurance is part of the mortgage and the bank escrows it and pays it.*
Property taxes — the bank also escrows the money in the mortgage payment for taxes.*
Security fees- I have no idea what this is, but we live in the city. Maybe Associations hire private security to patrol.
HOAs — agaain not all homes are in associations. I personally would not live in one.
*taxes and insurance will definitely be on our books directly once the mortgage is paid off.
For most of my life, I never considered buying a house. It wasn’t a life goal. When I got out of high school and went to college, my life as I envisioned it was going to be one of working my ideal job for which I went to university (music teacher, band director) and traveling in the summers.
But even as teaching music as a profession went bust (due to school funding cuts) and I migrated to other fields of employment the last of which was engineering, I still didn’t consider buying. The job market was always in flux and there was always the possibility of the need or want for a major relocation.
When my wife and I first got together, I wanted to relocate to Phoenix Arizona. I lived in Arizona briefly in 1985 as a music teacher before moving back to Michigan. The job, as noted, didn’t work out but I had several opportunities to make the 2–1/2 hour drive to Phoenix area on weekends and it was busting job opportunities of all sorts. If I wasn’t going to stay teaching, I could do just about anything there. But she didn’t want to relocate that far from her family her in Michigan.
In 2000, during a trip to a customer plant in Graz, Austria I took note of all the US based suppliers they had by looking at labels in their warehouse. I fantasized about a job located in beautiful Graz and actually wrote almost 20 of the suppliers an introductory letter and a suggested job as their onsite representative. I figured if I got ten of them at $3000–4000 each per year it would equate to a decent full income at the time. Nobody took the bite however.
In 2007, I had two job interviews in Ireland during the Celtic Tiger period. One in May in Galway and the other Tipperary in July. Neither job panned out but I loved the possibility of relocating overseas and especially to the land of my ancestors.
Later in 2007, I also had a job interview in Tualatin, Oregon, just south of Portland. That too would have been a great relocation.
From 2004 to 2014, I worked for a major automotive supplier. At one point, the electronics division was looking to locate an engineer at our Shanghai, China location and I volunteered. I didn’t get the position, however. My engineering job at this automotive supplier changed in 2014. My company sold the business unit I was in to another automotive supplier on July 1, 2014. The new employer began cutting local jobs within two months and my business unit lasted seven months and we were let go February 5th, 2015. However, I did get a hefty severance- the most money I’d ever been able to put in the bank, actually. And in 2015, as a short term employee of another company I did get to live in Shenzhen China for ten weeks. Fascinating and rewarding experience.
Fast forward to 2017. Many job changes later, and it looks like I am not going anywhere. My wife and I have been living in the same small (850 square foot) rented house since 1991. We had been there 26 years. We did some of the minor maintenance and also the yard work. The landlord did any major repairs.
I finally sat down with my wife and said “well it looks like we aren’t going anywhere outside this metropolitan area.” I was now 57 years old, not likely to need or want to relocate. I had that severance in the bank. The housing market was hot, selling fast, but as of that spring of 2017 interest rates and housing costs had not yet really started to climb (unlike the situation now in 2021–2022).
I asked a friend of mine who was a realtor to be our realtor and he began sending emails which were based on our parameters: price and location. I wanted to stay under $150,000 (ideally under $125,000). And we wanted to move INTO the City of Grand Rapids. I didn’t want to be in a suburb or surrounding city. Both my wife and I love the urban lifestyle. (We actually looked at a condo purchase in the downtown but decided against it).
We looked at numerous houses Dan sent us from the outside on evening drives. Then on Tuesday in May, Joni emailed me “Tell Dan we want to see this one right away.” Something caught her attention. Dan met us at the house in the evening. One couple was leaving with their realtor as we entered and while there another couple also toured the house.
The house was built in 1920. You could tell it was solid just walking around. The current owners (property flippers) had done some upgrades: laminate floors in the kitchen and livingroom, carpeting in the entire upstairs which consisted of two bedrooms, a den and an office.
We got home that evening and discussed. Here was a chance to have an abode all our own. Do what we want, paint, trim etc. The house was also twice as big to accommodate larger family gatherings. For twenty-six years we never did host anyone for holidays and always went to other relatives houses for Thanksgiving or Christmas gatherings.
We made an offer that night, which was accepted (with a small counter offer to which we agreed) over three other offers the owners had.
We had a house cleaning party in June after we closed on the deal and spent our first night July 24, 2017 in our new (and own and owned) home.
The previous (flipper) owners certainly have a system. They get the same three colors paint- a grey, a tan/beige, and white. The living room, dining room and bedrooms/office/Den are all grey with white trim The kitchen and bathrooms are beige with white trim. The laminate flooring is identical inthe kitchen and living room. All newly installed trim is the same small and inexpensive quarter circle trim.
We have gradually made the place ours. Repainted the dining room a vibrant deep red. We replaced the dated upstairs bathroom vanity with a more modern looking dark wood one. We just recently installed a new kitchen counter with an eye to repainting the kitchen and replacing the flooring which was done in a shoddy manner.
Whomever painted the white trim basically slathered it on fixtures and hinges and handles. Last year I swapped all the 30 or so kitchen handles. The current handles were a cheap yellow brass overpainted with white paint which wore off with use. I replaced them all with stainless handles.
We plan to eventually paint the master bedroom upstairs.
But on a personal level, owning a house has been one of the biggest stressors in my life. It’s one thing to have financial issues and be renting. You may get evicted but you don’t lose a major financial personal investment.
Owning a house, paying a mortgage, has kept me quite attuned to jobs and income. When I got laid off in May 2021, I was really on edge. Fortunately the pandemic relief was a huge help as was mortgage deferral. In the end, it all worked out.
[1] https://medium.com/makingofamillionaire/to-rent-or-buy-do-what-works-best-for-you-3dd39f9757b8
